The collapse of Carillion has once again brought to light the failure of so-called ‘free enterprise’ capitalism. Jeremy Corbyn, the Labour leader, said that Carillion was evidence of a “broken system” and a “racket”.
For decades, we have been told - by all governments alike, Tory and New Labour - that the private sector is far better at running services and building infrastructure than the public sector. This mantra served to justify their thirst for outsourcing and privatisation. But it was all a lie.
The private bloodsuckers were only interested in fleecing government contracts. To boost their profits, they cut corners, slashed costs, paid bills late, and so on. Privatisation and outsourcing have been a license to print money for big business.
The story of Carillion reveals the true ugly face of capitalism. As the editorial of City A.M. (15/1/18) fretted. “Such situations imperil public faith in business and the very principles of a market-led economy.”
They are right. The public is sick to death of the rich getting away with murder.
On top of this fiasco has been the scandal of the private finance initiative (PFI) to build much of Britain’s infrastructure, which has incurred billions of pounds in extra costs to the taxpayer, according to the National Audit Office.
Tory and Labour governments have signed more than 700 PFI deals, creating assets worth £57bn, according to Treasury figures. All this public money has ended up in the pockets of the corporate elite.
Olivier Brousse, chief executive of John Laing, which invests in and manages PFI for hospitals, schools and prisons, said PFI had lost “public goodwill” and needed “reinventing”.
But no amount of “reinventing” will disguise this corrupt and blatant scandal. It is a reflection of the real nature of capitalism in its drive to maximise its profits.
It’s not working
John McDonnell, Labour’s shadow chancellor, recently wrote a scathing account of the gulf between the big business elite, who have never been richer, and ordinary working people, suffering from austerity and real wage cuts.
“More billionaires were created in the past year than ever before in history. London now boasts more billionaires than any other city in Europe. A tiny number of people are doing extraordinarily well.”
He went on to say, that "the system isn't working".
“Public services in Britain have been cut and run down for a decade since the crash, in the name of ‘austerity’, but the rich and the giant corporations avoided more than £18 billion in tax last year. It’s not working when real wages for most today are lower than they were a decade ago, while average FTSE 100 CEO pay rose to £5.4 million last year. It’s not working when here in London homelessness is at a record high, and rough sleeping has risen for the seventh year running, but property speculators leave apartments and homes empty across the capital.”
“This is an economic system, graphically and obviously rigged for the few, against the many.”
John McDonnell goes on to warn, “If our rigged economic system isn’t radically changed and its rules rewritten, people will demand change…We need a systemic change — not just tinkering at the edges.”
We couldn’t agree more! This is powerful stuff. It is a shattering condemnation of the capitalist system. It is 100% correct.
Unfortunately, McDonnell pulls back from drawing the necessary conclusion. Rather than calling for the socialist transformation of society, he sees tax reform as the way forward. Instead of abolishing the “rigged” system, he asks instead, “What, then, can the global elite do?”
Clearly, they are satisfied with their lot. Why should they change? They will do what they have always done – continue to make obscene amounts of money. McDonnell’s suggestion that they should somehow change their ways, turn their backs on tax havens, and start paying their taxes is wishful thinking.
“I think we are all tired of seeing increasingly complex schemes being cooked up by accountancy firms with a direct interest in obscuring and hiding the earnings of their clients,” he correctly says.
However, the idea of asking the capitalist moneybags to stop being capitalists is not going to work. While they might go to Church on Sundays, their whole reason for existence is to make money and maximise their profits. In doing so, of course, they will pay an army of accountants and lawyers to ensure this continues. Pleading with this privileged elite will have as much impact as requesting that a flesh-eating lion become a vegetarian.
The suggestion that we can “change the culture of our financial system” misses the point. The banks and financiers are in business to maximise their profits. This is their “culture” or ethos. Capitalism is a dog-eat-dog society, where the working class is exploited to provide the profits (surplus value) for the billionaire bosses. This is the way the system works.
“We need systemic change”
The system is “broken” in the sense that it is in a deep crisis, which is the basis of the austerity imposed upon us. The system can no longer afford the reforms of the past. That is why it is cutting back everywhere. Of course, the ruling class gets richer and richer, as John describes.
The only solution is a fundamental change in society. In the words of John McDonnell, “we need a systemic change — not just tinkering at the edges.” Absolutely!
However, greater tax transparency – which we would of course support it – is not enough. It is like treating cancer with aspirin.
Labour was once committed to the abolition of capitalism and the introduction of socialism. This was outlined in the famous Clause 4 of its constitution. But Blair got rid of this. It is time that Clause 4 was brought back.
No amount of tinkering with capitalism - which leaves economic and political power in the hands of the capitalist class - is going to solve anything. The only way you can control the economy is to own it.
How else can you decide how much is to be produced; how many houses are to be built; what investment is going to take place, etc? All these decisions are presently in the hands of the captains of industry and the billionaire bankers.
The only way forward is to nationalise these top companies – only around 150 or so big businesses – together with the banks and insurance companies. Then the “commanding heights” of the economy can be planned democratically on the basis of what we need, and not on the basis of profit.
This is the only real answer to the corporate gangsters who presently decide our fate.